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Doing good doesn’t get old. But marketing leaders know that
effective promotion of a company’s charitable giving requires a
subtle combination of bedrock advertising principles with a few
twists. It’s often here that marketing and legal meet at the
eleventh hour before a campaign goes live. Understanding the bounds
of federal, state, and local laws that regulate charitable
fundraising before these efforts launch helps marketing
teams to be more efficient.

Knowing what type of giving campaign is in play is critical for
understanding what regulatory requirements apply. While options
abound, some perennial favorites include:

CCV Campaigns. If your company
advertises that the purchase or use of a product or service will
benefit a charitable organization or purpose, this charitable sales
promotion may classify your company as a commercial coventurer
(CCV). Though corollary rules apply, like states’ Unfair and
Deceptive Acts and Practices statutes, charitable sales promotions
are most directly regulated by states’ charitable solicitation
laws. These laws generally
require a company that acts as a CCV to obtain the
charity’s consent before the promotion starts and often require
specific terms to be included in those agreements. A handful of
states also require pre-promotion filings and bonds, as well as
post-promotion reporting. State fundraising laws and industry best
practices, like the Better Business Bureau Wise Giving Alliance
Standards for Charity Accountability, prescribe the details to be
included in marketing materials for these promotions.

Customer Donation Programs. A
customer giving campaign, such as point-of-sale contributions or
roundup-the-change promotions, is often referred to as a customer
donation program. State fundraising rules, industry developments,
and even takeaways from regulatory settlements may apply. When
conducting a volunteer customer donation program, a company should
retain no portion of the funds raised, receive no payment from the
charity to conduct the program, ensure all customer contributions
are timely transferred to the charity, and otherwise act
consistently with rules applicable to charitable trustees. This
includes making conspicuous (in other circles, “unavoidable and prominent”) disclosures
of material terms like those affecting how, when, and to whom the
contributions will be given. These are among the basic terms that
should be included in an agreement with the benefiting charity.
Although these campaigns typically raise minimal regulatory
concerns, beginning next year, companies should also review whether
California’s law applicable to
“charitable fundraising platforms” will require filings
in connection with a customer donation program, particularly one
with an online component.

Sweepstakes. Offering a prize in
exchange for suggested charitable donations could be considered a
sweepstakes or a contest, depending on how the winner is
determined. Where the prize will be awarded randomly, the sponsor
should ensure the entry donation is advertised as
“suggested,” while also clearly providing a free,
alternative method of entry for the sweepstakes. In addition to
preparing comprehensive rules that are readily available to all
eligible participants, certain material terms must be disclosed in
marketing materials, and a company may need to register and post
bond for consumer-facing promotions where the prize(s) exceed a
certain value. Beyond federal and state lottery law considerations,
a company should meet states’ charitable solicitation laws,
too. Companies that are not in the “business of
fundraising”—nor wish to fall into this regulated
space—should ensure that all funds raised through the
sweepstakes are retained by the charity. By contract, the parties
should make clear no commission or fee will be retained by the
company in exchange for this promotion.

By knowing how a campaign will be viewed under applicable law,
and what this means from a compliance standpoint, your marketing
team will be well equipped to launch a corporate giving campaign
quickly, efficiently, and effectively when inspiration strikes.

This article was originally published in the Performance-Driven
Marketing Institute’s (PDMI)
June 2022 issue of Results Magazine.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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